DUBAI, UAE – Several firms in the UAE have received requests from employees to adjust compensation packages in line with the inflation in the country, a global consulting firm has said.
Consulting firm Mercer revealed that 67 percent of businesses have received such requests.
Over 200 global and local companies from all sectors were covered for Mercer’s 2022 UAE Inflation Spot Survey.
Only 16 percent of the firms have taken some action, including one-time lump-sum payments, off-cycle salary increases and housing allowance increases, as they look to retain talent.
These firms have increased salaries by an average of 4 percent during annual salary increase cycles at the beginning of 2022.
Most business are resisting employee demands.
Even with inflation in the UAE projected to reach 5.6 per cent in 2022, according to the latest data from the Central Bank of the UAE (CBUAE), 47 percent of companies are not planning to take any action in 2022.
Around 37 percent of companies are considering or planning some form of off-cycle adjustment to compensation in 2022.
While the GCC’s second largest economy still sees relatively low inflation compared with other parts of the world, business activity in the UAE has been on the rise in 2022, resulting in the increased need for businesses to attract and retain talent to ensure business output remains on track.
Employee pay expectations are also rising in a tight labor market, as they are increasingly asking companies to take action to offset the rise in inflation.
As a result, companies are planning for budgeted annual salary increases for 2023 at five percent, which is higher than the 3-4 percent observed in recent years.
Andrew El Zein, Senior Associate Consultant, Career, MENA at Mercer said, “Employers are being cautious about immediately raising wages to match inflation, and many are considering short-term actions with less permanent implications such as lump-sum amounts or retention bonuses, or are investing in improving employees’ work experience by offering improved work-life balance, flexibility and training.”
Organizations that participated in the survey include a mix of some UAE’s biggest companies and international firms.